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Takeaway: We don’t believe this should be a sign that times are still bad at GIS.

GIS | Continuing to Make the Tough Calls - Chart 1

GIS is on the Hedgeye Best Ideas as a LONG

General Mills announced today, the approval of Project Compass, a restructuring plan designed to enable growth in the International segment, which will start in Q1 FY16. Very similar to Project Catalyst, which took place over about six months in FY15 in the U.S. based business in cutting approximately 800 positions. As part of this initiative management expects to cut 675 to 725 positions.

These restructuring actions are expected to be completed by early fiscal 2017, and will generate approximately $45 to $50 million, with approximately $25 to $30 million of cost savings being realized in fiscal 2016.

We don’t believe this should be a sign that times are still bad at GIS. With Project Catalyst recently ending in February, the organization simply needed time to digest learnings and then implement the initiatives across the broader organization. Albeit small in actual dollars, management continues to impress us with their willingness to make the tough calls that are necessary to succeed.

Next steps to a fundamental turnaround are growing the cereal category, continuing to innovate on the brands, and acquire some growth along the way.